ITAT Ahmedabad Quashes Rs. 440 Crore Bogus Purchase Addition as Reopening Found Time-Barred

The ITAT cancelled the reassessment because the reopening notice was time-barred, meaning it was issued too late, after the legal deadline. Since the notice itself was invalid, all further actions of the AO also stand cancelled. The final decision was announced in favour of the appellant.

The appeal had been filed by Satva Merchandise Pvt. Ltd., a company based in Anandnagar, against the Income Tax Department in the ITAT Ahmedabad. The case is related to the assessment year 2015-16.

The company challenged an order passed by the CIT(A), NFAC, Delhi, on March 21, 2025. The key issue in this appeal was whether the income tax department had the legal power to reopen the assessment for this year.

The company argued that the first reopening notice under section 148 was issued on April 20, 2021; however, for assessment year (AY) 2015-16, any notice issued on or after April 01, 2021, is invalid. The Supreme Court in earlier key judgements titled Union of india v. Rajeev Bansal and Deepak Steel & Power Ltd. V. CBDT ruled to set aside the reassessment notice as being time-barred.

The company also cited a Gujarat High Court judgement titled Narendra Maganlal Purohit v. Dcit, SCA No. 17443 of 2022, ruling such notices as void. The council says, “once the foundation notice of 20.04.2021 is invalid, all subsequent proceedings under section 148a(b), section 148a(d), and the reassessment under section 147 automatically fail.”

The department argued that the AO had valid reasons and that the CIT (a)’s order should be upheld. However, the tribunal examined the law and endorsed the arguments served by the company. It held that the notice issued on April 20, 2021, was time-barred, and therefore, the AO had no jurisdiction to reopen the case.

Since the initial notice was issued on April 20, 2021, which is after the legal time limit, i.e., April 01, 2021, for the assessment year 2015-16, the said notice is time-barred. Consequently, all subsequent proceedings, including The notice under section 148A(b) dated May 27, 2022, the order under section 148A(d) dated August 29, 2022, the further notice under section 148, and the assessment order under section 147 and 44B dated May 30, 2023, issued on the foundation of the invalid notice cannot survive. Hence, the appeal of the company was allowed.